Schools Face Huge Budget Problems Despite $1 Billion Stimulus Boost

With the federal government handing Illinois public schools more than $1 billion extra this year, you might think it's a good year for schools.

But you'd be underestimating the state's budget problems.

Even with boatloads of economic stimulus money coming from Washington, Gov. Pat Quinn is recommending just 2 percent in additional school funding.

And that's in a budget proposal that counts on raising income taxes and hitting teachers up for more pension support. Lawmakers might very well reject those changes.

President Barack Obama said last week Illinois would get about $3 billion over the next several years for public education as part of his effort to jump-start the flagging economy, including $964 million this spring to cover most of the remaining payments the state owes local districts for this school year.

Illinois has an $11.6 billion deficit, meaning the federal money is far from a cure-all.

The Democratic governor's budget plan for the fiscal year that begins July 1 allows for an overall increase in spending on preschool through high school of $173.4 million - a 2.3 percent bump.

That's not much compared to recent years. From 2008 to 2009, for example, spending increased $339 million, or 4.8 percent.

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Still, it beats the rate of inflation, which was just 1 percent in the past fiscal year and is forecast to drop further.

Most educators appreciate Quinn's effort, given the circumstances.

"Quality education is absolutely essential to a long-term economic recovery if we're going to be competitive in the 21st Century, so investing in education is one of the best investments we can make in this crisis," said Ken Swanson, president of the Illinois Education Association, the state's largest teachers union.

Despite the federal aid, Quinn proposes sweeping changes just to keep schools ahead. He wants a 50 percent increase in the income tax rate - along with generous exemptions to help lower-income residents - to raise $3.2 billion for the overall budget.

He suggests reducing pension benefits for incoming teachers and requiring existing ones to pay 2 percent more of their paychecks toward retirement. That would let the state reduce its payment to the downstate teachers' pension fund by $443 million next year.

And he would save $200 million by cutting three dozen grant programs - for class-size reduction, after-school programs and mentoring, and the cherished "hold harmless" provision that prevents any loss of money at schools with declining enrollment.

That grant money would instead be used for general state aid, which would let schools decide how to spend it.

"In a time of limited resources, giving schools the most flexible dollars is the way to go," said Sen. Heather Steans, a Chicago Democrat.

Many of the grant programs have entrenched constituencies that will oppose cutting the money, Steans acknowledged. But holding them off is the least of Quinn's problems.

Pitching the first income-tax increase in nearly two decades has advocates of education funding reform champing at the bit. They've been pushing for years to change the system to make schools less reliant on local property taxes, a system that creates wide disparities in school-district wealth across the state.

They want lower property taxes in exchange for higher income taxes, and their cause got a powerful endorsement last week from Chicago Mayor Richard Daley. Schools need more money than offered, and if income taxes go up, property taxes should drop, he said.

"There's a potential missed opportunity if there's an income tax increase and education doesn't really see any benefit from that," said Rep. Mike Smith, a Democratic education expert from Canton who's favored the "tax swap" and has sponsored legislation to change the income tax system to make it fairer.

The Illinois income tax is flat, meaning everyone is taxed at the same rate, regardless of income. Critics say such taxes create more of a burden on the poor.

Quinn wants a more progressive income tax too, but that would require a constitutional change at the next election.

Meanwhile, he has tried to soften the income-tax hit by suggesting tripling the personal exemption - income sheltered from taxes - from $2,000 to $6,000 a person. That makes the flat-rate income tax fairer to poorer people, but also cuts into the revenue a 50 percent tax hike could generate for schools.

"If we're going to do this and raise income taxes, we should do it in a way that works toward fixing the problem," said Dave Comerford, spokesman for the Illinois Federation of Teachers. "This may just not raise enough revenue to structurally fix it."

Teachers and school administrators are not fond of Quinn's pension design. The state's five pension systems are underfunded by $73 billion, largely because of years in which the state didn't keep up with its payments.

The governor reasons he can reduce deposits in future years by offering less-lucrative retirement benefits to new state employees. Current workers would get the same benefits but have to pay 2 percent more of their salaries toward the fund. For the Teachers Retirement System, covering teachers outside Chicago, that's already 9.4 percent.

"For nearly 30 years, governors and legislatures, Democratic and Republican alike, have raided the pensions by underfunding them," IEA's Swanson said. "Over those decades, we have made very contribution asked of us. We reject the idea that somehow we now should be punished."

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On the Net:

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Illinois education budget proposal:

http://www.isbe.net/budget/FY10-budget-book.pdf

http://www.isbe.net/budget/FY10-budget-compare-gov.pdf

Comments

[howcome]

CTU , tenure , Pershing Road... Thanks Democrats, you have run Chicago forever and Ilinois , CookCounty and now the country have the quality of living of only a South American socialist can envy

[MMMMom]

Teacher pensions have to stop. We can't continue to promise a fixed benefit for an unknown period of time. We would be better served as a state to give teachers raises and then have them contribute to their 403b (like a 401(k)) just like the rest of us do. As it stands now, we will implode as a state under the burden of teacher and other state pensions. When this system was set up. life expectancies were shorter and salaries were lower. With people routinely retiring at or near $100,000 ( a $75,000 pension if they worked long enough) and leaving years longer, we can't support it. It would be better for everyone involved, tax payers and unions alike, if we sucked it up and changed the system. Kudos to Quinn for at least starting the conversation, although I doubt the legislature will have the courage to do anything about it.

[ibsteve2u]

You just have to shake your head and marvel at what Republican policies have done to this nation over the last 30 years.

I'm thinking that if they had gotten their way on everything that they wanted for themselves, America's educational system would begin and end with Kalashnikov 101 like the rest of the banana republics.

[mater]

There isn't enough money on the planet to repair the disdain for learning, reading, writing, being able to do useful math by kids, who along with their parents, blame teachers for the big black hole of literacy in this country. It isn't about wealth or race--it's about making it a priority for a child in this country to become literate, educated and find value in a working knowledge of the english language in among tv, polarizing groups, national identities, religious extremes. Kids will enjoy, revel in the grand ness of being smart, confident scholars when their parents and friends make that seem like a doable and distinguished goal and job for every child to have. I don't think it's about anything more complicated and inexpensive than sitting down with a child and reading to them and having them read back, taking pride in homework done well and grades achieved with pride . When I was a school child, the worst thing I could do was disappoint my parents, with poor grades or behavior. Education gives all children the keys to a life well-lived.